It’s one step forward, and two more back

September 1, 2001

With over 70 per cent of Canada/U.S. trade moving by truck - much of it time-sensitive components and parts - an efficient border is an industry priority.The Canadian Trucking Alliance has been a stro...

September 1, 2001
by
David Bradley

Categories

With over 70 per cent of Canada/U.S. trade moving by truck – much of it time-sensitive components and parts – an efficient border is an industry priority.

The Canadian Trucking Alliance has been a strong supporter of Canada Customs’ efforts over the years to streamline customs processes and bring the administration of our border in line with the needs of a liberalized continental marketplace.

There is no denying that Canada Customs has made huge strides during the last decade.

New and innovative processes, such as a pre-arrival review system, have allowed Customs to review information or data prior to the arrival of goods in Canada in order to make the release decision when the goods arrived at the border.

A seemingly simple notion, the use of the in-transit time of the goods as part of the Customs review process, actually revolutionized border processes.

The Customs Self-Assessment (CSA) program, Customs’ response to today’s challenges, is based on a similarly simple, yet revolutionary concept: Trust.

On its face, CSA is an attractive program. It will allow low-risk goods to clear with minimal reporting requirements. In theory at least, it turns the concept of a seamless border into a reality.

For motor-carriers, CSA held the promise of expedited release and shorter border line-ups. It was seen by many as a bit of government re-engineering that would actually improve efficiencies and bottom lines.

But the last several months have underscored what many in the trading community suspected from the outset, – that the transition would not be smooth.

While the concept of CSA is valid and has merit, its application has created a maze of new approvals, undertakings, controls, checks and balances carriers must navigate at a time when competition is high and margins low.

The new requirements for mandatory driver registration are an excellent example of this point. They add more regulatory and compliance costs to an industry already weighed down by rising fuel prices, insurance premiums and other costs.

Compounding these problems is the driver shortage faced by the industry in Canada and in the U.S. The mandatory nature of the registration program, as well as the application processing delays that are to be expected, could exacerbate this situation and drive up labor costs.

Many carriers also utilize hundreds of drivers that are not only employees, but also private contractors. This newly imposed layer of control will require the carrier to check for new cards, lost cards, forgotten cards, expired cards, and misused cards belonging to contractors or run the risk of crippling fines for non-compliance under the new Administrative Monetary Penalty System (AMPS).

If CSA can be called the carrot, the new AMPS regime is the stick.

The new penalty system will replace the old seizure and forfeiture regime that Customs feels is no longer flexible to deal with the new realities of international trade.

Under the proposed new system, carriers will be held to a very high standard of performance with little room for error. Although the acceptable standards have not been finalized yet, early indications are that carriers will be expected to maintain as high as a 99 per cent error-free level in an environment approaching 14 million truck crossings a year.

This begs the question, would the Customs agency accept to be held to the same high level of performance with respect to errors by their officers?

Another shortcoming of the CSA program is that it runs the risk of applying only to a narrow segment of the trucking industry.

While in theory the CSA program is available to every carrier and importer in Canada, it is focused on the top 1,000 large importers who primarily utilize the southwestern Ontario border corridor – Windsor, Niagara Falls, Fort Erie, and Sarnia. Our concern is that the trucking industry must service the other 140,000 importers as well, providing them with an equitable process at all Customs border crossings.

There is no doubt that for a certain number of carriers, CSA will represent a significant marketing advantage as they will be in a position to market their services as a CSA approved carrier to the select community of approved importers.

The program was to usher in a seamless border.

However, in the absence of dedicated CSA lines, it is not evident that the program will actually result in significantly faster border crossings.

But for all its shortcomings, CSA remains a significant step forward in the modernization of our border.

Its biggest failure is probably that it doesn’t live up to its advance billing, but then again, few government programs do. n

– David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.